Every municipal budget season seems to follow the same script. Residents open their tax bills, see another increase and ask themselves why does it keep costing more to run our cities?
The answer is complex. Inflation has driven up the cost of providing services. Labour costs have increased and the City of Hamilton has significantly increased the number of employees working at the City over the last four years. Political decisions on public policy priorities have also led to budget increases. Meanwhile, aging infrastructure requires billions in investment. All while expectations for municipal services continue to grow.
But there is one part of the conversation that often gets overlooked and that is assessment growth. When cities add new homes, apartment buildings, commercial developments and industrial investments, they also add new property assessment to the tax base. That growth creates new revenue without increasing tax rates on existing homeowners.
More taxpayers sharing the cost of municipal services means less pressure on each individual taxpayer. The math behind municipal taxation is straightforward. Municipal tax rates are determined by dividing the tax levy by the total assessment base. As the assessment base grows through new construction and investment, the burden of funding city services is spread across more properties. This matters now more than ever as homeowners have been faced with multiple years of significant property tax increases.
One of the most overlooked realities in municipal finance is that growth will occur somewhere in the region regardless. The question is whether Hamilton captures the economic activity, housing investment and property assessment that comes with that growth, or whether neighbouring municipalities do.
Large year over year tax increases can be avoided. When cities grow and add more homes, businesses and taxpayers to the assessment base, the cost of funding municipal services is shared more broadly. More people paying into the system means less pressure on each individual property taxpayer.
Hamilton faces a significant challenge. Its 2026 budget includes hundreds of millions of dollars in infrastructure investment and rising costs to provide services and pay for increased levels of staffing.
Despite this, Hamilton has largely chosen to focus its growth strategy on intensification rather than expanding the urban boundary. Intensification has an important role to play, particularly around transit corridors and urban centres, but municipalities cannot simply dictate the type of housing people aspire to live in. For many families, the dream of homeownership still includes a ground-oriented home and a small backyard with space for children to play. Whether planners like it or not, that remains the housing preference for many residents across our region.
The challenge for Hamilton is that when those housing options are constrained locally, many prospective homeowners do not abandon the dream, they simply pursue it elsewhere.
The financial consequence is significant. Every family, homeowner and business investment that chooses another municipality instead of Hamilton represents assessment growth that leaves the city permanently. That new assessment then helps fund municipal services somewhere else instead of helping reduce the tax burden for Hamilton residents.
In effect, Hamilton has created planning policies that risk limiting its own long-term assessment growth potential, while neighbouring municipalities benefit by expanding their tax base. The result is that the city becomes increasingly reliant on raising property taxes on existing residents to fund municipal services, rather than broadening the assessment base through balanced and attainable housing growth.
Housing discussions are often framed solely around affordability for renters and first-time buyers. Those concerns are critically important. But there is another affordability issue at stake, the affordability of remaining in the home you already own. For many families, seniors and fixed-income residents, annual property tax increases are becoming a significant financial strain. Adding housing development that people are seeking rather than thinking that they can force people to live the way that aligns with Council’s ideologies is short sighted, ineffective and cost the individual taxpayer hundreds more year after year.
Ultimately, municipalities have two choices: broaden the tax base through balanced housing and employment growth or continue relying more heavily on existing homeowners to fund rising municipal costs.
